National States Ins. Co. v. Commissioner

Petitioner, an insurance company, issued guaranteed renewable health and accident insurance policies during the years in issue. Under these level premium policies, petitioner could neither cancel nor refuse to renew coverage for life or to age 65, but reserved the right to adjust the scale of premiums by class based on experience. Petitioner estimated its unearned premium reserve on the basis of gross pro rata unearned premiums and the additional reserve on the mid-terminal basis. The additional reserve, which reflected petitioner's long-term obligation stemming from the guaranteed renewable…